Compare Strategies
| LONG CALL BUTTERFLY | MARRIED PUT | |
|---|---|---|
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| About Strategy |
Long Call Butterfly Option StrategyA trader, who is neutral in nature and believes that there will be very low volatility i.e. expects the market to remain range bound, will implement this strategy. This strategy involves selling of 2 ATM Call Options, buying 1 ITM Call Option & buying 1 OTM Call Option of the same expiry date & same underlying asset. The difference between the strikes sho |
Married Put Option StrategyThis strategy is applied when trader goes long on the underlying asset i.e. he buys the stock in cash market. He has a bullish view and expects the market to rise in the near future, but simultaneously has the fear of downward movement of the markets. In order to cover his position from vulnerabilities he buys one ATM Put Option of the same underlying asset. Here, a trader wi .. |
LONG CALL BUTTERFLY Vs MARRIED PUT - Details
| LONG CALL BUTTERFLY | MARRIED PUT | |
|---|---|---|
| Market View | Neutral | Bullish |
| Type (CE/PE) | CE (Call Option) | PE (Put Option) |
| Number Of Positions | 4 | 1 |
| Strategy Level | Advance | Beginners |
| Reward Profile | Limited | Unlimited |
| Risk Profile | Limited | Limited |
| Breakeven Point | Upper Breakeven = Higher Strike Price - Net Premium, Lower Breakeven = Lower Strike Price + Net Premium | Purchase Price of Underlying + Premium Paid |
LONG CALL BUTTERFLY Vs MARRIED PUT - When & How to use ?
| LONG CALL BUTTERFLY | MARRIED PUT | |
|---|---|---|
| Market View | Neutral | Bullish |
| When to use? | This strategy should be used when you're expecting no volatility in the price of the underlying. | This Strategy work when the investor goes long in any stock. He expects the rise in market in future. |
| Action | Sell 2 ATM Call, Buy 1 ITM Call, Buy 1 OTM Call | Buy 250 XYZ Shares, Buy 1 ATM Put Option |
| Breakeven Point | Upper Breakeven = Higher Strike Price - Net Premium, Lower Breakeven = Lower Strike Price + Net Premium | Purchase Price of Underlying + Premium Paid |
LONG CALL BUTTERFLY Vs MARRIED PUT - Risk & Reward
| LONG CALL BUTTERFLY | MARRIED PUT | |
|---|---|---|
| Maximum Profit Scenario | Adjacent strikes - Net premium debit. | Profit = Price of Underlying - Purchase Price of Underlying - Premium Paid |
| Maximum Loss Scenario | Net Premium Paid | Max Loss = Premium Paid + Commissions Paid |
| Risk | Limited | Limited |
| Reward | Limited | Unlimited |
LONG CALL BUTTERFLY Vs MARRIED PUT - Strategy Pros & Cons
| LONG CALL BUTTERFLY | MARRIED PUT | |
|---|---|---|
| Similar Strategies | - | Long Call |
| Disadvantage | • Due to limited lifespan of call options, you can lose the premium paid. • Limited profit which is bound in a narrow range between the two wing strikes. | Cost of the put options eats into profit margin. |
| Advantages | • Under this strategy, a trader can book profit even when there is not volatility in the market. • Limited risks to the net premium paid. • This strategy allows you to gain more profits by investing less and limiting your losses to minimum. | Unlimited Profit and Limited Risk |